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UBS reports a net profit after tax of CHF 1,579 million for the first quarter 2001, down 29% compared to the first quarter 2000, or 19% excluding the goodwill impact of the PaineWebber merger. Business units performed well, despite less favourable economic and market conditions. Clients invested more than CHF 21 billion in net new money.

In the first quarter 2001, UBS achieved a net profit after tax of CHF 1,579 million. This represents a decline of 29% over the buoyant first quarter 2000, or 19% excluding the goodwill impact of the PaineWebber acquisition, and a decrease of 3% on the preceding quarter, once adjusted for significant financial events*.

"Our businesses performed encouragingly this quarter, with resilient income and well-controlled costs, despite the weakening equity markets and the industry-wide slow down in investment banking, " commented Luqman Arnold, President of the Group Executive Board.

With strong trading performance, and fees and commissions accounting for more than half the Group's revenue, operating income was resilient, up 8% from first quarter 2000.

Tight cost control had a significant influence on the results. Costs in both the Private and Corporate Clients and Private Banking units were lower than for any quarter last year. In UBS Warburg's Corporate and Institutional Clients business unit both the compensation/income ratio and the cost/income ratio were at the same level as the first quarter last year. For the whole Group, non-personnel expenses fell quarter-on-quarter, despite a full quarter's costs from UBS PaineWebber.

Net new money in the private client units (Private Banking and Private Clients) was CHF 11 billion in the quarter, up from CHF 5 billion in fourth quarter 2000. Net new money for the Group was more than CHF 21 billion, the best quarterly result reported since the UBS/SBC merger. All business units posted healthy inflows despite declining markets and weakening investor confidence in the US. Total invested assets decreased by less than 1% during the quarter to CHF 2,438 billion.

In the private equity portfolio, deteriorating asset quality led to write-downs of investments, which combined with poor conditions for divestments to produce a loss of CHF 282 million in UBS Capital. UBS Capital expects to show a profit over the remainder of the year.

Performance against Group Financial Targets: Pre-goodwill and adjusted for significant financial events:

Annualized return on equity was 17.6%, below the exceptional level of the first quarter of 2000 but within the target range of 15 - 20%.

Basic earnings per share decreased 26% to CHF 4.49 from CHF 6.04.

The cost/income ratio rose to 73.9% from 66.5% in first quarter 2000, and 73.0% in fourth quarter 2000, reflecting the influence of the relatively high cost/income ratio typical of UBS PaineWebber's business.

Strategic Initiatives

Private Banking Implementation of the new European wealth management strategy is well underway. Integrated management structures are in place for each region, the buildup of client advisor numbers is on track, and the projects to upgrade products, training, marketing and technology for the new businesses are on target, bringing together the expertise of UBS PaineWebber and Private Banking.

UBS PaineWebber The early introduction of the UBS PaineWebber brand was made possible by the extremely positive reception for the merger from PaineWebber staff and the smooth progress of integration. The decision to implement the new brand was supported by requests from UBS PaineWebber financial advisors, who wanted to emphasize to their clients the advantages in scope, scale and access to global resources brought by UBS PaineWebber's new place in the UBS Group.

Investment bankingUBS Warburg has enhanced both its capabilities and performance in corporate finance, with involvement in four out of the seven largest global mergers and acquisitions deals announced in the first quarter. The integration of PaineWebber has delivered an outstanding hiring platform in the US, allowing the bank to take selective advantage of hiring opportunities.

Outlook Prospects for global economies are uncertain, although conditions in Switzerland continue to be healthy. At Group level, UBS does not see the potential for 2001 to outperform 2000. Nevertheless, the resilience of core businesses so far this year has been encouraging. "Our businesses are showing themselves to be more and more competitive and are well positioned to respond positively to improving market conditions," commented Luqman Arnold.

* Significant Financial Events:

There were no significant financial events in first quarter 2001 or first quarter 2000.Fourth quarter 2000 saw two significant financial events:

Results of the business groups

UBS Switzerland

Private and Corporate Clients recorded its best ever quarter with net profit before tax of CHF 540 million, up 6% from fourth quarter 2000. Revenues were down slightly from fourth quarter, but costs were lower than in any quarter last year, reflecting the continued impact of efficiency projects and the benefits of the UBS/SBC merger. Net new money inflows of CHF 3.2 billion were recorded during the quarter. Private Banking's profits remain healthy, up 14% compared to fourth quarter 2000 at CHF 780 million, with income dropping only marginally and costs at a twelve-month low. Net new money strengthened to CHF 3.9 billion, from CHF 0.2 billion in fourth quarter.

UBS Asset Management

UBS Asset Management's pre-tax profit recovered to CHF 52 million, from CHF 36 million in fourth quarter 2000. Thanks to its successful relative investment performance, the business group attracted net new money of CHF 7.4 billion, the first overall net inflow since 1998. Institutional new money outflows continued to moderate this quarter, totaling CHF 3.3 billion compared to CHF 6.9 billion last quarter. UBS Asset Management recorded net new money inflows in its US institutional business. Phillips and Drew's flagship fund was the only one in its peer group to record a positive return over the last 12 months. Invested assets in mutual funds increased from CHF 319 billion at 31 December 2000 to CHF 332 billion at 31 March 2001. Net new money inflows of CHF 10.7 billion during the first quarter reflected US investors' increased appetite for money market investments provided by Brinson Advisors, and strong net new money growth in European-registered equity funds.

UBS Warburg

UBS Warburg's Corporate and Institutional Clients business unit reported very strong results with a pre-tax profit of CHF 1,325 million, down only 8% from the record results achieved in the exceptional markets of first quarter last year, while increasing 40% from fourth quarter 2000. Market volatility led to strong trading performance, with particularly good returns in fixed income. UBS Warburg's Private Clients business unit, based on the UBS PaineWebber franchise, was relatively unaffected by the continued downturn in US equity markets, with profits and revenues running ahead of the fourth quarter. Pre-tax profit totaled CHF 123 million. Net new money for first quarter 2001 was CHF 6.8 billion, compared to CHF 4.9 billion in fourth quarter 2000.

Cautionary statement regarding forward-looking statements

This communication contains statements that constitute "forward-looking statements", including, without limitation, statements relating to the implementation of strategic initiatives, including the implementation of the new European wealth management strategy and the implementation of a new business model for UBS Capital, and other statements relating to our future business development and economic performance.While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in local and international securities markets, currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit-worthiness of our customers, obligors and counterparties, (6) legislative developments and (7) other key factors that we have indicated could adversely affect our business and financial performance which are contained in our past and future filings and reports, including those with the SEC.More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS's Annual Report on Form 20-F for the year ended 31 December 2000. UBS is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as result of new information, future events, or otherwise.